Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Universal Health Care under scrutiny for years before regulators swept in

ST. PETERSBURG — Florida insurance regulators have long had suspicions about Universal Health Care, the nearly insolvent St. Petersburg Medicare insurer the state now accuses of fraud, forgery, embezzlement and other illegal financial conduct.

In fact, ever since the first time the company was on the brink of insolvency in 2007 — before its CEO A.K. Desai arranged an emergency infusion of funds — Universal was under heightened scrutiny.

Typically, the Florida Office of Insurance Regulation subjects companies to a formal exam every five years. "This one we were involved with a lot more frequently," says Belinda Miller, the state agency's general counsel. "We've looked at this company pretty closely over the years."

Regulators worried the company was growing too quickly. It had a revolving door of chief financial officers — five within six years — and has been hammered by poor quality ratings the past three years from federal Medicare overseers. In a lawsuit a year ago, a former vice president of Universal accused the company of various accounting irregularities.

Despite those simmering suspicions and accusations, the state didn't launch a formal investigation into the company until Aug. 24, 2012. The trigger: a qualified audit opinion from Ernst & Young that refused to sign off on certain Universal financial statements for 2011 citing a "material weakness" in the company's internal controls.

Miller defended the time it took to both start and complete the probe.

"It's one thing to know a company has issues. It's another thing entirely to prove a company is insolvent, and we had to have proof," she said.

The proof they now have, investigators say, points to a broad pattern of financial mismanagement under Desai's leadership. The company allegedly overstated its assets and misled both regulators and its primary lender, BankUnited.

Under regulatory guidelines, an HMO becomes a candidate to be taken over by the state if it has been the victim of "embezzlement, wrongful sequestration, conversion, diversion or encumbering of its assets; forgery or fraud or other illegal conduct" threatening its solvency. Asked which violations applied in this case, Miller said all of them do.

Florida Chief Financial Officer Jeff Atwater is moving to liquidate the insurer, which has been deemed "virtually insolvent," while Insurance Commissioner Kevin McCarty's office discusses potential civil or criminal action with state and federal law enforcement agencies.

State regulators say they don't plan to take any other actions until if and when a circuit court judge appoints Atwater's office as receiver and the company is found insolvent. A hearing is expected within a couple of weeks.

As the Times previously reported, state documents indicate that the company was, by its own admission, insolvent by $12.6 million as of Dec. 31 and would require $30 million to keep going.

State regulators in Ohio and Georgia took action against Universal late last year, reaching consent agreements in which the company agreed not to enroll new Medicare members.

Florida didn't follow suit, Miller said, because it wanted to focus on the bigger issue of proving the insurer was insolvent. Besides, she said, reaching a consent agreement with the company to stop writing policies didn't work the last time.

In 2007, Universal accused the state in court of coercing it to sign a consent agreement, Miller said. During prolonged legal proceedings, Desai was able to bolster Universal's finances before it could be declared insolvent.

The state approved Universal to resume selling coverage in February 2008, and it quickly expanded to 20 states.

"We didn't have the evidence (of financial misdeeds) then that we have now," Miller said. "We (only) had financial statements that indicated an impairment or insolvency."

To fend off creditors and buy time to potentially sell the company, Universal's parent company, which also is controlled by Desai, filed for Chapter 11 bankruptcy reorganization earlier this week.

Dealing with Universal's woes has had other impacts on Desai, who is well-known as a major donor and fundraiser for the Republican Party. This week, he resigned his position as state finance chairman for the Republican Party as well as his seat on the Florida Board of Education.

In email responses to questions from the Times, Desai said he had to review the state findings before commenting.

Separately, he said he was assuring workers the company would persist. At last count, Universal employed nearly 1,000 people at its downtown St. Petersburg headquarters.

"Of course employees are worried, but I conveyed the message to all our employees that continue to focus on taking care of our members and their needs and keeping 'business as usual,' " Desai wrote. "We need to persevere and continue to march on. That is resonating well in this difficult time for the company. We have loyal customers and employees and I am confident that we will be able put this difficult time behind us."

Jeff Harrington can be reached at or (727) 893-8242.


What's next?

Bob Craig is plagued by a question shared by about 100,000 fellow Universal Health Care members in Tampa Bay and beyond. "Am I going to be safe?" the 72-year-old Clearwater retiree worries. Here's a look at what Universal members like Craig can expect as the company winds its way toward potential liquidation:

What happened to Universal Health Care?

Florida insurance regulators have not only found the company virtually insolvent but also accused management of fraud and other illegal financial conduct. Florida Chief Financial Officer Jeff Atwater has filed suit with intent to liquidate the company. A court hearing is anticipated within a few weeks.

What happens if I don't do anything?

Short-term, you remain a Universal Health Care member. Medical providers that accept Universal are required to give a 60-day notice if they intend to terminate the contract. Non-payment of claims doesn't waive that notice, state regulators said.

And longer-term?

If a judge approves the liquidation of Universal and appoints Atwater's office as receiver, the state would move to shift Universal's members to one or more other providers. Similar to open enrollment, you would likely be able to choose a different provider at that time.

Can I switch Medicare providers now?

Contact your agent to discuss options. Florida regulators say in similar cases, members have been allowed to switch to another Medicare provider even though this is long past the fall open enrollment period.

Jeff Harrington, staff writer

Universal Health Care under scrutiny for years before regulators swept in 02/08/13 [Last modified: Saturday, February 9, 2013 2:01pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. White nationalist Richard Spencer is scheduled to speak at the University of Florida tonight and the school is on high alert for tensions. [Associated Press]
  2. Bowen: Park land deal raises Penny for Pasco questions


    The Penny for Pasco is unambiguous.

    At least it is supposed to be.

    There was no equivocating in 2004 when Penny for Pasco supporters detailed how the sales tax proceeds would be spent: schools, transportation, public safety and environmental lands. No money for parks. No money for recreation.

    Pasco County is considering a loan from its Environmental Lands Acquisition and Mangement Program to buy land for a park in the Villages of Pasadena Hills in east-central Pasco. Shown here is the Jumping Gully Preserve in Spring Hil, acquired by ELAMP in 2009 and 2011.
[Douglas R. Clifford, Times]
  3. Another Tampa Bay agency loses tax credits worth millions in dispute over application error


    LARGO — Another Tampa Bay housing agency has lost out on a multi-million dollar tax credit award because of problems with its application.

    A duplex in Rainbow Village, a public housing complex in Largo. The Pinellas County Housing Authority is planning to build new affordable-housing in the complex but was recently disqualified from a state tax credit award because of an issue with its application.
  4. Live blog: Many unknowns as Richard Spencer speaks in Gainesville today


    GAINESVILLE — A small army of law enforcement officers, many of them from cities and counties around the state, have converged on the University of Florida in preparation for today's speaking appearance by white nationalist Richard Spencer.

    Florida Highway Patrol cruisers jammed the parking lot Wednesday at the Hilton University of Florida Conference Center in Gainesville, part of a big show of force by law enforcement ahead of Thursday's appearance by white nationalist Richard Spencer. [KATHRYN VARN | Times]
  5. As Clearwater Marine Aquarium expands, it asks the city for help


    CLEARWATER — When Clearwater Marine Aquarium CEO David Yates saw an architect's initial design for the facility's massive expansion project, he told them to start all over.

    Clearwater Marine Aquarium Veterinarian Shelly Marquardt (left), Brian Eversole, Senior Sea Turtle and Aquatic Biologist (middle) and Devon Francke, Supervisor of Sea Turtle Rehab, are about to give a rescued juvenile green sea turtle, suffering from a lot of the Fibropapillomatosis tumors, fluids at the Clearwater Marine Aquarium Wednesday afternoon. Eventually when the turtle is healthy enough the tumors will be removed with a laser and after it is rehabilitated it will be released back into the wild.  -  The Clearwater Marine Aquarium is launching a $66 million renovation to expand its facilities to take in injured animals and space to host visitors. The aquarium is asking the city for a $5 million grant Thursday to help in the project. American attitudes toward captive animals are changing. Sea World is slipping after scrutiny on the ethics of captive marine life. But CEO David Yates says CMA is different, continuing its mission of rehab and release, it's goal is to promote education, not exploitation. JIM DAMASKE   |   Times